ON CONTENT AND WAYS OF THE CONSTRUCTION OF CHINA’S BUSINESS ENVIRONMENT UNDER THE RULE OF LAW
Qian Yuwen
TABLE OF CONTENTS
I. EXPERIENCE OF JIANGSU PROVINCE IN THE CONSTRUCTION OF A BUSINESS ENVIRONMENT UNDER THE RULE OF LAW
A. Innovation on the System and Policies to Optimize the Business EnvironmentB. Innovation on Ways of Enterprise Credit FinancingC. Continuation to Create a Business Environment under the Rule of Law
II. MAIN PROBLEMS IN THE CURRENT BUSINESS ENVIRONMENT UNDER THE RULE OF LAW IN CHINA
A. Innovative Measures Require Legal SupportB. Legalization of Local Government Needs to Be UpgradedC. Crimes of Illegal Fund-raising Are IncreasingD. Efforts Need to Be Made to Achieve Judicial Justice
III. PATH AND COUNTERMEASURES TO BUILD A LEGAL BUSINESS ENVIRONMENT
A. To Improve Legislation and Provide Security by Top-level Designed SystemB. To Standardize Law Enforcement and Build a Government with Integrity under the Rule of LawC. To Improve the Judicial Justice and Judicial Capacity of the Court and the Business Environment under the Rule of LawIn recent years, China's private economy has encountered some difficulties during its development. It calls for an emphasis on the construction of rule of law to optimize the business environment. A good business environment will definitely help to ease the private economy plights. Jiangsu province has benefited from the construction by improving the rules and policy system of the business environment, innovating the ways of enterprise credit and financing, and creating business environment under the rule of law. However, many problems remain such as the lack of legal support for the innovative measures, the need to improve the level of legalization of grassroots government, the increasing crime of illegal fund-raising and a long way to achieve judicial justice. Therefore, to solve the above problems, this article proposes the content and ways of creating business environment under the rule of law as follows: completing the related legislation to provide rule-based guarantee on top design level, standardizing law enforcement to build a government with good faith under the rule of law, and improving the court's judicial capacity to promote the business environment under the rule of law. In recent years, with the increasing economic downward pressure in China, private economy development has encountered many difficulties. It calls for a good business environment as the key to ease the private economy plights where the rule of law is the best solution. Creating harmonious environment and concise and effective policies for business is the greatest support for the development of enterprises. A good business system environment embraces stable policies, efficient government, impartial judicature and safe property. In such environment, relative rewards for productive activities of entrepreneurs will increase, so they will spend more time on their economic activities and allocate more energy to productive efforts. They will be willing to increase capital investment to expand the scale of enterprise production as well. On the contrary, a bad business system environment will lead to the decline of their economic activity time and entrepreneurs will allocate more energy to unproductive efforts.The business environment refers to the institutional factors and conditions involved in the market economy activities by market entities such as enterprises. On the institutional level, the security by rule of law includes the protection of investors, bankruptcy management, supervision of the labor market and the establishment of a good social credit environment. The business system of rule of law is protected by both substantive law and procedural law. The construction of the business environment under the rule of law consists of two main aspects: administrative affairs and the market, both of which should be measured by the indicator system of business environment. The system includes the indicators that measure the degree of completion of law and regulations on access to credit, protection of the minority of investors, execution of contracts and resolution of insolvency, and the fairness of the enterprise's life cycle regulatory process. The soft environment of investment, which is directly controlled by the government, is closely related to the business environment. The soft environment includes the legal environment, the policy environment, the government agencies and their services, the credit environment and the business ethics environment. As for the research scope of the rule of law for business environment, it is no longer limited to the previous indicators of justice and democracy. It is now combined with the World Bank's rule of law services, which focuses on the performance of contracts and the judicial efficiency in the business environment. On January 1, 2020, the Regulations on Optimizing the Business Environment will enter into effect. It will bring the business environment construction into the orbit of the rule of law, and provide more powerful protection and support for optimizing the business environment on the institutional level.Domestic and foreign scholars have made some achievements in the researches on the construction of business environment under the rule of law. They mainly cover the following aspects: scientific legislation, administration in accordance with the law, judicial justice and so on. However, from the perspective of a systematic legal regulation, the existing researches are not enough and need to be improved. For example, we still lack an overall grasp on the legal guarantee of market economy development and an in-depth study on the way of establishing the legal business environment. Under the rising of trade protectionism in the world, in order to meet the overall demands of China's economic restructuring, economic mode transforming and financial opening up, China's capital market needs to play an active role in the global economic competition, and improve its ability of allocating resources worldwide to promote the real economy in China. Jiangsu province, as a model of creating business environment governed by law, has put forward new requirements for the guarantee of the rule of law. Thus, the author's research group has conducted the survey on the construction of a business environment under the rule of law in Jiangsu province since the middle of June in 2019.I. EXPERIENCE OF JIANGSU PROVINCE IN THE CONSTRUCTION OF A BUSINESS ENVIRONMENT UNDER THE RULE OF LAWThe research group has selected the following cities in Jiangsu province to conduct the research: Nanjing, Xuzhou, Wuxi, and Kunshan. The research focuses on the legislative and policy environment, the administrative environment in accordance with the law, the judicial environment and the local advanced experience and practices. The discussion for the research comes from the representatives of the government, the court, the procuratorate, private enterprises, foreign investment enterprises, legal experts and scholars. The survey covers provincial capital cities, central cities in northern Jiangsu, cities economically well developed in southern Jiangsu province and cities concentrated with foreign investment enterprises. These cities are the examples and representatives of building up business environment under the rule of law with Jiangsu characteristics. A. Innovation on the System and Policies to Optimize the Business EnvironmentSince 2018, many cities have published normative documents for optimizing the business environment. These documents focus on key issues that enterprises are concerned with, provide full range services, make rules and policy systems with various particularities. For example, Nanjing made property rights protection as one of the key issues in 100 Articles on Optimizing the Business Environment in Nanjing. It has studied and formulated 16 detailed measures for the protection of intellectual property, enterprise bankruptcy, withdrawal, protection of entrepreneurs' rights and interests. These measures include setting up a green channel for registration and establishing a multi-resolution mechanism for property rights disputes. It has also shortened the trial period of civil and commercial cases involving property rights, upgraded the compensation standard for intellectual property rights infringement, implemented comprehensive services for intellectual property rights protection, paid attention to the rescue and withdrawal of enterprises, and strengthened the guarantee of rights and interests of the prevailing party. These policies reflect their innovative thinking at leading level in China. Besides, in some of the cities, the working mechanism of 'quick response and no disturbance' is fixed as a system to serve enterprises. It helps further improve the quality of services for enterprises by government departments at all levels and standardize enterprise-related behaviors.In the examination process of regulations and normative documents, Wuxi city takes fair competition review as a necessary procedure, and requires the responsible department to conduct self-examination and cross-examination in making the first draft in order to ensure the equal position of private enterprises in the market competition. For the adjustment of important matters and major interests involving private enterprises, special argumentation consultation and third-party evaluation shall be carried out to properly solve major problems and ensure the scientific and fair legislative process.In Kunshan city, the Regulations on Deepening Cross-strait Industrial Cooperation Pilot Area of Kunshan was listed in the Legislative Plan of Jiangsu Provincial People's Congress Standing Committee from 2018 to 2022. The regulations are made according to the particularities of Taiwan region and conform to the actual situation of Kunshan as well. These regulations have provided strong legal guarantee for the pilot area in terms of system and mechanism reform, optimization of business environment, etc. Kunshan has taken the leading position in publishing the White Paper on Business Environment Construction of Kunshan. By this document, it has launched 23 policies and 10 supporting measures to optimize the business environment, and achieved the new goal of '1330' service mode of Kunshan edition (i.e., for start-up of enterprises, real estate registration and industrial construction project permission, respectively reduced to 1, 3, 30 working days).B. Innovation on Ways of Enterprise Credit FinancingIn order to construct business environment under the rule of law, we should completely cancel the administrative license for enterprises to open bank accounts and urge financial institutions to increase the amount of loans to small and medium-sized enterprises and private enterprises. We should also cancel all kinds of illegal fees, management fees, consultation fees, counsel fees, commitment fees, etc. Private enterprises, micro, small and medium-sized enterprises should be free from discrimination. Commercial banks should treat them equally just like state-owned enterprises. On the basis of equal treatment, the loan applications of small and medium-sized enterprises and private enterprises should receive reasonable and favorable treatment. For example, we can establish local fiscal support mechanism for the development of micro, small and medium-sized enterprises as well as provide financing support like loan risk compensation and financing guarantee for them.Nanjing city is committed to building a Nanjing model of technology finance by enforcing the support of directional loans to technology enterprises. Through soft guarantees like the establishment of special funds such as loan risk compensation and the encouragement of banks to adopt innovative guarantee methods such as credit loans and intellectual property pledge, it privileges the support for technology innovation enterprises on the initial and growth stages.Xuzhou city took the leading position in launching the online service of chattel mortgage registration that can be handled on line anywhere. Xuzhou also implements the 'Three Guarantees and One Push' service measures focusing on chattel mortgage, equity pledge, trademark pledge to promote the construction of enterprise credit system. These help provide high-quality services for enterprise financing.Wuxi city has constantly optimized the financing environment. It has established the municipal small and medium-sized enterprises emergency loan fund and carried out compensation policy for the credit risk of these enterprises. It also establishes a small bill service center, prevents and solves the 'capital chain risk' of enterprises, and promotes the deep cooperation in industrial finance.Kunshan city has built and improved the collection service platform by making full use of big data and modern information technology. It has also promoted the connection of 'Kunshan social legal person credit information database', 'Suzhou local enterprise credit system' and 'financial supermarket'. It indicates that ways should be expanded to improve the collection of public credit information. Enterprises should be encouraged to use the capital market for financing, and relevant policies such as the Rules for the Operation of Special Funds for Listing and Reward of Enterprises in Kunshan should be issued timely.C. Continuation to Create a Business Environment under the Rule of LawNanjing has drafted the Measures on Prudent Solution of Property Preservation in Accordance with the Law to Support the Healthy Development of Private Economy (for Trial Implementation). It includes 15 preservation measures to prohibit sealing up, capturing and freezing the property involved in the case beyond the standard and the responsible scope, and to supervise the administrative organ to perform the administrative commitment in accordance with the law. It stipulates that for unilaterally changing or terminating the agreement due to the public interest or other legal reasons, the entrepreneur shall be awarded fair and reasonable compensation in accordance with the law in case of any loss. It also tries to protect the rights and interests of small and medium-sized investors in the dissolution and liquidation of their corporation. Xuzhou city adheres to the principle of equal protection according to the law in handling cases involving private enterprises. It also improves the quality of case-handling involving enterprises and guarantees the legitimate rights and interests of winning enterprises.Wuxi city emphasizes the cooperation of international law enforcement and security. It promotes the police security forces to go abroad to protect the key overseas investment projects of enterprises and enhances the ability of the enterprises to cope with overseas risks. Kunshan city cracks down on crimes against personal rights such as intentional injury, kidnapping and illegal detention in accordance with the law, in order to ensure the safety of business owners and employees.II. MAIN PROBLEMS IN THE CURRENT BUSINESS ENVIRONMENT UNDER THE RULE OF LAW IN CHINAThere are still some problems existing in the security by rule of law for China's economy development in the aspects of scientific legislation, strict law enforcement and fair justice.A. Innovative Measures Require Legal SupportThe formulation of laws and regulations to optimize business environment can integrate the work of optimization with the rule of law and play an active role in the legal guidance and the reform promise. There are many mature experiences in the reform of business environment optimization, which need to be normalized through legislation. Besides, some reform measures that have been proved effective in practice need to be fixed by legislation, while other reform measures need to be clarified and replicated through legislation. For example, the following mature experiences and reform measures need to be made clear by legislation: the reduction of the start-up time of enterprises, the guarantee of equal market access, the effort to maintain a fair competition market order, the solution of financing difficulties and the simplification of the withdrawal process of enterprises. With the benchmarking reform of 'ten indicators of World Bank business environment assessment', the market legal system is constantly improving, but there are still some problems which have impeded our reform. Firstly, the legal conflicts need to be properly resolved. For example, there is a conflict between the 'online service' of real estate registration and the provisions of paragraph 1 of article 15 in the Interim Regulations on Real Estate Registration which requires the parties to go to the real estate registration authority for on-site handling. Secondly, institutional construction in some areas needs to be strengthened. For example, for credit financing, cross-border trade, data sharing and application, social credit and other fields closely related to today's development, legislative activities need to be on the agenda as soon as possible.The existing domestic capital market, which focuses on public offering and listing on the stock exchange, will gradually develop into a capital market system with equal emphasis on public offering and private placement, a balance between stocks and bonds, and coordinated development between on-site and off-site. However, we are now faced with many practical problems including the imbalance of the capital market's internal structure, insufficient ability to serve the real economy, and lack of relative provision of investment and wealth management products for residents. For this, we need to formulate unified management rules, strengthen administrative supervision and enhance innovation vitality based on functional supervision.B. Legalization of Local Government Needs to Be UpgradedIn the survey, many entrepreneurs said that the level of the rule of law of local governments needs to be improved. Firstly, the integrity of the government needs to be strengthened. Because now the government is often prone to changing policies, and the phenomenon of 'new officials ignoring old policies' happens from time to time. In many places, government departments and state-owned enterprises are in arrears with the private enterprises and small and medium-sized enterprises. In some areas, grass-roots organizations are in arrears with the construction projects and loans of rural schools. As the maintainer of the business environment, if the government breached the contract unilaterally, it will destroy the overall market environment of the local area, so the degree of legalization and integrity of the grass-roots government needs to be improved. Secondly, the reform of the administrative examination and approval system of the government has not yet achieved remarkable results, and the access and withdrawal mechanism of private enterprises is not completed. For example, in recent years, the small-sized electrolysis industries in southern Jiangsu have to deal with their solid wastes in the northern Jiangsu or in other provinces because of the increasingly strict environmental protection law enforcement. It has increased the costs for enterprises and made some enterprises with a certain scale and advanced technology move out, which may endanger the integrity of the industrial chain. At present, the central and provincial governments have published lists of administrative fees and government funds. However, there are still some problems such as different local standards of government fund charges, various kinds of association dues, disguised charges, various subjects of charges, large randomness, and disorderly apportionment and fines. Finally, the absence of supervision still exists in the fields of legislation, reform, repeal and interpretation of policy documents, administrative punishment, trade secret protection, law enforcement supervision, credit supervision and accountability. The problem at present is that the supervision is just a slogan, and it stops at practice. C. Crimes of Illegal Fund-raising Are IncreasingThe illegal fund-raising and improper investment and financing of enterprises will lead to corresponding financial risks. At present, the common situation of illegal fund-raising by enterprises shows no corresponding entity and operation behavior at the beginning of fund-raising activities. From the very beginning, enterprises borrow new money to repay old debts, and even use the Ponzi scheme. The emergence of the Internet has increased the number of these types of crimes and presented bigger risks for investors. For example, some enterprises carry out illegal fund-raising activities through the Internet or other channels, gathering a large amount of money in a short period of time. Their activities expand to multiple industries and fields, which makes comprehensive management more difficult. Now, the illegal fund-raising in traditional vulnerable industries including investment counsel, wealth management and online loan platform has been suppressed, but illegal fund-raising rises in pension, tourism, education, ecological technology and many other industries. Therefore, considerations and actions should be made on how to further standardize private financing, to distinguish illegal fund-raising behavior, and to make grassroots finance better serve the development of private economy.D. Efforts Need to Be Made to Achieve Judicial JusticeWhat private enterprises really need is a law-based business environment with unbiased competition, impartiality, affairs-handling in accordance with the law and no label of ownership. In practice, protection has not been effectively given to private enterprises and their employees for their personal and property safety. Besides, by expansion the criminal law has intervened in economic disputes. As ordinary economic disputes are defined as illegal crimes, the directors and senior executives involved are forced to take measures to seal up, seize and freeze the enterprise property, which causes serious damage to entrepreneurs. So we must optimize the business environment based on the trial function and boost the development of enterprises. Problems of intervening in civil and commercial disputes by means of administration also exist, such as administrative intervention in justice, intervention in judicial trials and so on, which have not been completely corrected yet. Methods on how to deal with legal issues such as debt to equity, holding to break, triangle debt of private enterprises, equity pledge, interconnection and mutual protection are the key to clear barriers during the legalization of the business environment.
III. PATH AND COUNTERMEASURES TO BUILD A LEGAL BUSINESS ENVIRONMENTInstitutional change can be divided into two types: induced change and mandatory change. Since China's reform and opening up, the practice has proved that the mandatory institutional change mode controlled by government has played an important and effective role in economy governance in China. The tangible hand of the government can play a positive role in the development of the market economy. Aiming at the business soft environment indexes (start-up of enterprises, construction permits handling, obtaining power, property right registration, obtaining credit, protecting a few investors, paying taxes, cross-border trade, contract execution, and bankruptcy handling), the government can improve the quality of its system and policy and create a better business environment to promote economic development.6 In order to promote the sustainable and healthy development of China's market economy, we should speed up the international vision and promote the sustainable and healthy development of China's market economy, accelerate the adaptation of the new pattern of the state's comprehensive opening-up and better serve the Belt and Road Initiative and other major development strategies of the Party and the State, and enhance the international image of China. In order to maintain China's economy security internally, we need to accelerate the integration of business environment system under the rule of law into the social grass-roots governance system, to promote the reform of administrative management and law enforcement, and to make the external thrust of effective management of corporate enterprises. We also need to strive for the formation of a new pattern of business environment under the rule of law in improving the business environment and public trust power by working with the Party committee leadership, government participation, industry self-discipline, judicial supervision and social supervision. Definitely, high quality legislation can guarantee and promote the sustainable and healthy development of the economy; The construction of a law-abiding and honest government can ensure that different market entities are treated fairly. Prudent justice is the last line of defense to protect the legitimate rights, interests of entrepreneurs and normal economic activities. We need to standardize the operation of power, to improve service efficiency and to create an efficient and transparent government environment. So, we will establish a strict and fair judicial system to modernize the judicial system and capacity, and to demonstrate institutional advantages.A. To Improve Legislation and Provide Security by Top-level Designed System1. Learning from the Good Experience of Foreign Legislation. — China's capital market has basically formed its legal system and regulatory system with the promulgation of the Regulations on Optimizing the Business Environment and Some Opinions on Providing Judicial Guarantee for Improving the Business Environment, together with the current effective laws and regulations in China's capital market, as well as a large number of self-discipline rules of exchanges and associations. China's capital market is temporarily in a depressed state although its legal system is relatively complete. The crux is not the lack of funds, but the lack of confidence, integrity and the rule of law. It is necessary to achieve convergence and connectivity of the system and eliminate system barriers based on our national conditions no matter it is to support domestic enterprises to finance abroad, or to encourage domestic institutions and individuals to invest in securities abroad, or to facilitate the financing in China for overseas enterprises, or to equally protect overseas institutions and individuals to invest on securities in China. It is particularly important that market competition is first and foremost the competition of systems and rules. In order to enhance the international competitiveness of China's capital market, on the one hand, it is necessary to ensure that China's market attracts more enterprises as the business environment under the rule of law improves through institutional rules. On the other hand, it is indispensable to enhance China's initiative in international rule making and cross-border law enforcement cooperation involving the opening up of capital markets. Therefore, the corresponding system design should not only be based on China's national conditions, but also be in line with international customs. Hence, the foreign capital markets and legal systems, especially those of the US are particularly worthy of profound study.Generally speaking, the American capital market is the most developed market in the world, and also the market with the highest degree of the rule of law since the rule of law is the cornerstone of the American capital market. In fact, there is a causal link between the mature legal system of the US and the competitiveness of the American capital market. The core inspiration of American financial law is to emphasize the equity of capital market and the protection of investors' rights and interests. Every stock disaster in the history of the US, without exception, is accompanied by the comprehensive upgrade and substantial revision of the investor protection system. For example, during the great depression, the Securities Act of 1933, the Securities Exchange Act of 1934, and the Investment Advisory Act of 1940 were successively promulgated. The same is true of the historical development of case law in the US. We can say that the protection of the rights and interests of small and medium-sized investors runs through the whole process of the American capital market. In the past few decades, the anti-regulatory trend has prevailed among the US government. The Securities and Exchange Commission is involved and its focus of work has been shifted to the protection of the companies and investment banks under its supervision. However, the financial crisis once again proved the limitation of 'economic man hypothesis' and 'efficient market hypothesis'. Faced with the crisis, regulators in the US once again realized that no matter how big the market is, they could only be castles in the air in a market full of greed and cunning. Especially after the international financial crisis in 2008, the overseas capital market has made significant adjustments to the regulatory system and mechanism. It has also put forward many new regulatory requirements and issued many new legal documents. For example, the US innovated the financing mechanism and the tax credit system. It has also regulated the equity crowdfunding system, and formulated the Dodd Frank Wall Street Reform and Consumer Protection Law with the nature of comprehensive financial supervision. These all provided institutional guarantee for fair disputes settlement among the main bodies of the capital market and for steady improvement of the fairness and efficiency of the capital market.2. Revising the Company Law, the Security Law and Other Relevant Laws and Regulations by the Standing Committee of the National People's Congress. — We should speed up the introduction of systematic and institutionalized laws on the business environment under the rule of law. We should improve legislative safeguards to make up for the lag of relevant laws in creating this kind of business environment. Besides, we should give full play to the functions of the Standing Committee of the National People's Congress, and comprehensively guarantee the implementation of the party's and state's strategic plans. Meanwhile, we need a further comprehensive reform of the system of government properly in response to the new situation of administrative practice. Highlighting the importance of legislation is also essential in creating a business environment under the rule of law. According to Max Weber, 'rational' law supports the development of economy activities by providing expectation and legitimacy for market transactions. Douglas North proposed that developed countries have successfully formed reliable and low-cost systems to protect property rights and ensured the performance of contracts. Their demonstration process can be abstracted into the following equation: good law + good law enforcement = good economic performance. Similarly, to optimize our business environment independently, the rule of law needs to play a leading and safeguarding role. However, at present, related legal policies in China are not complete enough in that a number of innovative initiatives lack legal support. Legislation plays a leading, promoting, standardizing and safeguarding role in building a business environment under the rule of law and the civil and commercial legal system must keep up with the pace of reform. We need to standardize civil and commercial activities to create a fair market environment and to ensure the smooth progress of reform. We should combine indicators of 'start-up enterprises', 'protect minority investors' and 'access to credit' in the business environment assessment of the world bank with the actual situation of China's legislation. The relevant contents of the Company Law, the Property Law, the Security Law and other laws and regulations should be properly revised to reduce the threshold of enterprises market access, protect the legitimate rights and interests of small and medium-sized investors, and protect the legitimate enterprise property. For example, the controlling shareholder in the related party transaction shall bear the liability for damages within the scope of its benefits. It suggested that, in case of damages to the company, the involved directors must bear the liability for any damages. If the resolution of the shareholders' meeting or the board of directors is unconscionable and damages shareholders' interests, the shareholders may exercise the revocation right within 60 days after the resolution is made. It is also suggested that the security interest can be extended to recognizable income, products and substitutes. The uniform rules of publicity effectiveness should also be established. In addition, the Standing Committee of the National People's Congress can study and formulate the legislation of the Fair Trading Law to provide a legal atmosphere of fair competition for the development of enterprises with different ownership systems. We should improve the system of intellectual property laws and regulations, amend the existing patent protection system, and strengthen legislative protection of trademark rights, inventions and other key areas of intellectual property.3. Carrying Out the 'Legislation, Reformation, Repeal and Interpretation' Work of Normative Documents concerning the Optimization of Business Environment. — China can adopt the World Bank standard to our national business environment evaluation system, and set up the relevant index system to reflect and measure the construction of business environment under the rule of law. According to both theories and experiences, although the government's influence on development factors such as geographical location and natural resources is very limited, they impact property rights, regulations, taxation, infrastructures, financial markets and labor markets operation and broader economic governance (such as anti-corruption), as well as improve the business soft environment. Society is the soil of soft environment construction, the market economy is the foundation of soft environment construction and human is the key factor of soft environment construction. As the implementer of the soft environment construction, the government should develop corresponding laws and regulations to ensure the soft environment construction. Governments at all levels and their relevant departments should establish a regular review and evaluation system for rules and normative documents. Its results shall be used as an important reference for revising and abolishing relevant rules and normative documents. In case of any violation against or conflict with the superior law, obstruction of fair competition in the market and infringement of the legitimate rights and interests of the market entity shall be amended or abolished in time. We will strengthen the examination of related normative documents and resolutely repeal or revise the rules and regulations and policy documents that are not suitable for reform and development and that are against the optimization of business environment. For example, we should amend paragraph 1 of article 15 of the Provisional Regulations on the Registration of Real Estate to meet the requirements of online service. Article 37 of the Regulation on Optimizing the Business Environment stipulates the construction of an integrated online platform to promote the nationwide implementation of all-in-one website service and to achieve 'A market participant has autonomy in choosing government service channels, and no administrative agency may limit the channels.' According to the basic legal principle that the new law is superior to the old law, these provisions should also be applicable to the registration of the real estate. The publication and interpretation of laws and policies can be made public through government gazette, government official website, government service hall, government social media and other platforms. The public can therefore raise questions and seek answers from the government. We should adhere to the combination of government leadership and social governance and formulate normative documents involving the rights and interests of market entities. A hearing system can be introduced for the opinions of the public, industry associations and chambers of commerce. In this way, we can absorb and adopt reasonable opinions.With the emergence of credit rating agencies, the failure of credit rating has been greatly criticized by the public. Its failure in the financial crisis caused public doubt. Credit rating agencies are defined as the emerging economic assurance organizations among the social medium level organizations. Credit rating is an important way to guarantee the consent right of small and medium-sized investors. It is also an institutional form which appears under the background of the socialization of government functions. The conflict between the public and profit-making roles of credit rating agencies needs the intervention of national legislation. Its internationalization characteristic determines the internationalization trend of credit rating legal system. In addition, it is suggested to issue financial supervision regulations as soon as possible and endow local financial supervision bureaus with legal status. We should also coordinate the relationship between local financial supervision bureaus, banking and insurance regulatory bureaus and securities regulatory agencies and clarify the administrative law enforcement power of local financial supervision bureaus. With all these measures, we can deal with problems in time and effectively prevent and control local financial risks. At the same time, we should learn from the legal systems of the overseas market on private placement, debt financing, asset management and its derivatives. With previous experiences, we can boldly innovate the systems and mechanisms under the respect to the market rules, in order to ensure that all systems can meet the actual needs of market reform. B. To Standardize Law Enforcement and Build a Government with Integrity under the Rule of Law1. Standardizing Law Enforcement to Highlight Business Environment Optimization. — For the government, it is forbidden to do anything beyond the stipulation of the law. On this sense, we should limit governmental working scopes to stop the government from acting like an 'economic man'. In the past, the government as an 'economic man' actively and directly participated in economy construction. Now they should reshape their image and transform towards a more neutral and impartial service-oriented government. The government is expected to develop the market of right empowerment, and to release the free development vitality of the market entities. They should also strengthen the social security system, and maintain the fair competition and independent innovation of the society. Standardizing the operation of administrative power and protecting the legitimate rights and interests of the private parties are the important requirement and guarantee to optimize the business environment. For the administrative law enforcement, the government needs to further standardize its behavior, clarify the standards, procedures, the principle of proportion and the principle of excessive punishment, and improve the responsibility system. In addition, we should innovate supervision methods and standardize law enforcement. We must further establish the mechanism of 'double random and one transparency'. 'Double random' means the full coverage of joint examination across departments, while 'one transparency' refers to building a National Enterprise Credit Information Publicity System, and improving the enterprise information collection and publicity system. For serious crimes like bullying, forced trading, forced engineering, monopolistic operation, schemed loan, extortion, and mob harassment, as well as cases that infringe on the personal and property rights and interests of business operators, we need to adhere to the principle 'fight as soon as possible and as early as possible'. We should treat each case separately and make sure that we investigate and handle them rapidly and take a clear stand to protect the production and operation order of private enterprises and the personal and property safety of their families as well. We should also speed up the construction of 'one single network' for the list of charges to make the charges items transparent, and make the illegal charges disappear. When dealing with costs of enterprises, we should solve the problems including unwillingness to reduce, only reduce a small amount and not reduce it in time from the system level. Guided by the principle of 'dare to act, willing to act and act actively', we should use the power in accordance with the law, standardize the use of the power, use the power impartially and streamline administration and delegate powers. We should address the traditional 'three illegal acts' (illegal charges, illegal fines and apportionment of charges) and tackle the new 'three illegal acts' (arbitrary inspection, arbitrary evaluation and arbitrary training). We should put an end to power rent-seeking and build a transparent and service-oriented government. In practice, Kunshan strived to help enterprises to purchase professional services (lawyers, accountants, etc.) and facilitate their compliance operation. Nanjing packaged complaints about damages to the business environment into the 12345 complaints hotline, which is supervised by special personnel and replied within a time limit, and then will give the public feedback. Wuxi launched a special legal service, which is the 'hundreds of law firms helping thousands of enterprises'. This activity focuses on the prevention and control of legal risks of private enterprises. It provides legal services according to the 'paint points' of enterprises and guides the management of enterprises according to the law. Therefore, a better legal environment for the development of private enterprises is coming into being.Administrative punishment should follow the principle of legitimacy, purposiveness and proportion. Under the principle of prudence and tolerance, the system of pre-punishment education should be implemented for the less serious wrongful acts. We need to warn and educate them before imposing the administrative punishment. It is forbidden to replace management by punishment and emphasize punishment while ignoring education. However, serious illegal behaviors shall be subject to administrative punishment according to the law. With the requirements of the responsibility system, we need to carry out activities to make the public aware of the rule of law. For the general wrongful acts of the market entity, the punishment shall have legal basis and be implemented in accordance with legal procedures. Administrative compulsory measures shall be taken prudently according to the law in order to minimize the adverse effects on the normal production and operation activities of the market entity and protect the complete industrial chain of the regional manufacturing industry. The government should regulate the discretion and add detailed information and make it transparent for the public as much as possible. When exercising the right of discretion, it should be in line with the exclusion of irrelevant factors. The measures taken should be appropriate, necessary and justified. For example, Suzhou has issued the List of Exemption from Punishment for Misdemeanors of Business Operations in the Market. It is based on the principle that the administrative punishment should be made in accordance with the facts, nature, circumstances and social harm degree of the illegal business operations. The first misdemeanor of business operations is exempted from administrative punishment according to the law. Kunshan Tax Bureau follows the principle of legal and reasonable administration to standardize the exercise of the discretion of administrative penalty. They also fully implemented the principle of 'exemption from penalty for the first time' in daily law enforcement. Under certain conditions, taxpayers who violate the law for the first time in the year and correct it in time can be exempted from administrative penalty.2. Innovating the Service of Reviewal and Approval. — In the examination and approval process, we should implement the list of power, the negative list and the responsibility list. These tasks should be finished without any delay according to the law. With the help of modern information technology, we can carry out 'Internet + regulation', and visualize the power list to promote the execution of power. In addition, Shenzhen has put forward the online business registration system, one code for one business license, business license before certification, and integrating multiple certificates and licenses in one for enterprises. The application for company formation should be handled in one-stop processing online. It also proposed complete online registration service for enterprises and online automatic approval for the formation of limited corporations with self-employed and natural shareholders. The name of business subject can be independently filed through Wechat. The commercial registration authority should share the relevant information with departments including the department of public security, of taxation and of social security through the public credit information sharing platform. If the relevant information can be obtained through active collection, government information sharing, etc., the market entity should not be required to provide it again. For further research, we will explore the establishment of 'online service at one platform' for regional government services in Beijing, Tianjin and Hebei provinces, the Yangtze River Delta and the Pearl River Delta in order to help government improve administrative efficiency and regional integrated service level.3. Building a Protection System for Small and Medium-sized Investors. — China's current specialized financial laws and regulations emphasize the normal and stable operation order of financial institutions, and few of the direct provisions protects small and medium-sized investors. Under the influence of financial globalization, China's financial market has developed. The public has become more and more dependent on financial services with a growing awareness of the protection of their interests and rights. However, high and low-quality financial products are mixed and the level of financial services is uneven, which has brought increasing financial disputes. Therefore, the voice of protecting the interests of small and medium-sized investors is also increasing. In view of this, China is at stake to clarify the goal of small and medium-sized investors protection from the perspective of concept and legislation system. We should also build a small and medium-sized investor protection system to protect them with financial supervision and give full play to the huge driving role of all kinds of investors in China's capital market and real economy. We will increase the proportion of direct financing and vigorously promote equity culture to further boost the confidence of public investors. We will also standardize and orderly develop the multi-level capital market, and finally build a set of legal frameworks of trading rules and regulatory system that are consistent with international common principles. These measures will effectively maintain normal market order and guarantee the proper market functions and roles. This can further accelerate the development process of China's capital market under the rule of law.4. Innovating Credit Supervision System. — We should facilitate the industrial and commercial registration system and establish and improve the social credit system. We should also take 'easy access and strict control' as the main goal of the reform and implement the principle of 'business license before government permits'. We should make registered capital subscription registration system and other major measures to achieve 'easy access', and take strengthening the credit supervision as the main goal of 'strict control'. This reform not only fosters the major conceptual changes and mode of market supervision, but also raises the credit supervision of market entities to an unprecedented high level. However, the credit supervision of market entities is a systematic project involving multi-party interest conflicts. We should strike the balance of all the parties involved, which needs continuous theoretical research and institutional improvement. As an important part in the credit supervision of market entities, during the process of enterprise credit information collection, sorting, preservation, processing and providing enterprise credit information to the demanders of enterprise credit information, there are many legal conflicts and unbalanced problems, such as maintaining transaction security and protecting enterprise business secrets. In addition, the construction of China's enterprise credit system has initially formed an independent and complementary system structure in many fields: financial field of public credit, the government affairs field of joint credit and the commercial field of private enterprise credit. However, under the reform of the market supervision system, it is still necessary to summarize and reflect on the problems during the enterprise credit investigation to further seek its development path. Credit publication is the premise and punishment for bad faith is the guarantee, while the social credit system is a comprehensive punishment mechanism. 'Law enforcement' not only relies on coercive measures, but also and more on non-coercive measures like 'no communication' or 'no trust' to sanction or to deterrent. Through strict punishment mechanism, we can increase the cost of bad faith and sanction the illegal credit behavior to create a good credit environment and to maintain the stable operation of credit economy.The legislation of social credit should be based on big data and we should visualize the social subjects. The government departments should give joint rewards and punishments within the scope of legal authority to promote the good faith while punishing the bad faith. The administrative organs should distinguish the supervision objects according to the different risk levels and credit levels. For low risk enterprises who operate in accordance with the law and with good faith, the proportion and frequency of spot-checks should be appropriately reduced. For those enterprises with bad faith and high credit risk, we should check them more frequently. We can establish a joint disciplinary mechanism and a joint credit publication system in different fields and departments to strengthen the disclosure and management of related information and to improve the exposure of dishonest parties. Local people's governments at all levels and their relevant departments should, in accordance with the national unified standards and norms, publish and share the credit information of market entities in time according to the law. With the means of credit punishment, we can make it difficult for market entities who have once been dishonest to further developed. We can add the mechanism of credit objection and credit restoration to increase the sectors of objection, correction, restoration and removal. In this way, dishonest parties can protect their rights and interests through administrative reconsideration and administrative litigation. They can also correct and remove the unfavorable information through credit restoration. The credit entry unit shall verify and feedback the results within five working days from the date of receiving the objection and the information verified to be wrong shall be corrected or cancelled within three working days from the date of feedback. The relevant departments should not punish them again after the credit restoration. Where the rights and interests are damaged due to the joint punishment of dishonesty, the relevant departments should eliminate the adverse effects and make compensation. Wuxi has established and improved the systems including credit commitment, classified supervision, white and black list, joint incentive for keeping promise, joint punishment for bad faith, and credit restoration to build a credit management environment for private economy. Suzhou has standardized the collection of public credit information for administrative law enforcement and clearly confirmed the information standards for bad faith. Administrative penalties applicable to simple procedures will not be uploaded as bad faith information. So we can learn from the pilot plans of the two cities and improve it in the future.5. Establishing Accountability and Fault-tolerance Mechanism. — The establishment of accountability mechanism involves the government, industry associations and chambers of commerce, intermediary service agencies, public utility enterprises, and the implementation of withdrawal mechanism and fault tolerance mechanism. We should clarify the responsibility of the government to optimize the business environment. For those wrongful acts of the staff including fraud, concealment facts or interference or obstruction of the investigation, we need to order them to apologize publicly. We can also cancel their qualifications, remove them from their posts, dismiss them from their office, or even expel them. In this way we can make sure that they truly abide by the discipline and will be held liable for any wrongful acts. For those who violate the regulations and damage the business environment, apart from imposing administrative penalties such as fines, ordering to suspend production and business and revoking business license, credit regulations should be imposed too. Especially for the false statement of securities institutions, it is not only necessary to do credit publication and punish them in the field of politics and commerce, but also recommended to impose punitive damages on them.For enterprises with false registration, fraudulent registration, expired license, unlicensed operation and serious security risks, they shall be forced to withdraw from the system, and their registration shall be prohibited for a certain period of time. Directors, supervisors and senior executives of the related enterprises shall be prohibited from entering the market for a certain period of time as well. Optimizing the local business environment under the rule of law is an important way to help local economy development. We should establish a caring and fault-tolerant mechanism for enterprises and create a healthy growth environment for entrepreneurs. It can help strengthen the legal protection of entrepreneurs, protect business secrets of enterprises, and truly implement 'no double punishment for one wrongful act'. If the enterprise violates the law slightly and for the first time, we should focus on education, supervision and rectification in accordance with the law and try to avoid punishing them or to impose lenient punishment.6. Building a Government with Good Faith under the Rule of Law. — In line with the first-class business environment worldwide and guided by the expectations and demands of market participants, we will accelerate the construction of a government under the rule of law. We should clarify the boundary between the government and the market to create a streamlined and efficient government ecology. We should also continue to implement streamlined administration and delegated power with excellent services as well. Besides, we should also create an open, transparent, fair and just environment under the rule of law to meet the stable expectations of market entities. In practice, the government encourages private enterprises to participate in fair market competition. They speed up the standardized management of power list and organize the administrative licensing, administrative collection, administrative confirmation and other administrative power matters, which should be published through the government service website. We need to strengthen the supervision of administrative power and achieve the legalization, standardization and normalization of power exercise. The government has vigorously promoted public legal services and has built multi-tiers public service centers in provincial, municipal, district, county and township level, where related staff are arranged to work all the year round. There are also public lawyers on duty who can solve conflicts and disputes and provide legal aid to help the public out. It means that we should have a professional legal service group and send them to private enterprises with high-quality legal services.Market economy is a contract economy that pursues fair competition. However, the government's consciousness of rule of law is weak and their policies often change. And their lack of contract spirit will damage the image and credibility of the government. Therefore, the government departments shall fulfill the policy commitments they have made and the contracts and agreements they have signed. They should not breach the contract because of the personnel transition or the adjustment of policies. State organs and institutions cannot be in arrears with the payment of goods, projects and services to enterprises. Market-dominated enterprises should not abuse their advantages in trading and force small and medium-sized enterprises to accept unreasonable trading conditions. If it happened, enterprises are entitled to require the defaulting party to pay the arrears and compensate for the losses caused by the arrears. Governments at all levels should add assessment and indicators to check whether they make timely payments or not to the enterprises, especially to the small and medium-sized enterprises. Governments at all levels and their relevant departments should make policy commitments to market entities in strict accordance with laws and regulations. They cannot commit preferential conditions in violation of laws and regulations. When participating in civil activities as civil subjects, the government should exercise their rights, perform their obligations and bear responsibilities equally. State organs, institutions and large enterprises should not refuse to perform their payment obligations to small and medium-sized enterprises because of the change of their legal representatives or main responsible persons. We should establish a supervision mechanism where credit is the core and strengthen the government's sense of integrity and legal awareness. We should correct the acts like 'new officials ignoring old policies', and punish the government for its dishonesty according to the law.C. To Improve the Judicial Justice and Judicial Capacity of the Court and the Business Environment under the Rule of Law 1. Regulation of Financial Supervision plus Financial Trial Cooperation for the Prevention and Control of Local Financial Risks. — The disadvantage of separated financial supervision mode is when financial institutions integrate their business, especially when they tend to form groups during their developments, regulators must exercise supervision responsibility in their unfamiliar areas. Therefore, their supervision efficiency may decline and their divisions of labor will fall into certain conflicts. At present, China adopts a diversified financial supervision system, whose pattern is sub-institutions and sub-sectors supervision. This is mainly based on the separate operation and supervision of the financial industry and financial institutions' business stipulated by the law. Although our multiple regulatory systems are similar to most countries in the world, China's financial regulatory system still has some problems faced with challenges of financial market changes and financial innovation. Although in our law, the restriction of separate operation has not yet been cancelled, many legislations and practices have shown that the mixed operation has emerged, the cross and integration of financial business has gradually become a trend.The access to financial industry adopts the 'consultation mechanism' in advance, which is convened by the financial regulatory institutions of governments at all levels. Local financial supervision institutions should strengthen the guidance and supervision of financial institutions in financial services and make the name list of professional lenders. They should also accept queries from financial institutions, and regularly publish relevant information as well as monitor the enterprises and individuals who violate the rules of lending. In recent years, there are more and more illegal fund-raising activities in society and their forms are more and more diverse. Illegal fund-raising now is often accompanied by fraud, which is confusing and misleading especially for the middle-aged and elderly people. Illegal fund-raising refers to the act of absorbing funds from the general public (including entities and individuals) in violation of the provisions of the state laws on financial management. Currently, the public has suffered serious economic losses due to illegal fund-raising, which has caused a large number of social security problems and become one of the social instability factors. What is more, it has disturbed the normal economic order and financial order.Cooperating with the special fight against crime, we should sort out the key enterprises with financial risks. Take measures such as warning, account inquiry, industrial and commercial control, case filing and crackdown to control risks and stabilize our society. For illegal fund-raising and other criminal acts, we should also detect them early and deal with them effectively. At the same time, in order to ensure the orderly development of judicial regulation, we should appoint more staff and groups to the public security and judicial organs. In addition, the judicial organ should be the main body of long-standing cases handling (cases for judicial treatment), and the assets involved should be disposed under the legal framework strictly to avoid legal risks and sequelae.2. Preventing and Controlling the Criminal Risk of Senior Executives of Private Enterprises and Improving the Bankruptcy System. — We should improve the mechanism of judicial protection of property rights and protect these rights of entrepreneurs, company executives and their close relatives. We should also protect the investment, income and other legitimate rights and interests of the market entities of all kinds of ownership according to the law. Infringements of intellectual property rights such as the trademark, the patent and trade secrets of the enterprise and defamation on their business and products reputation should be uncovered according to the law. It is found that judicial justice and property rights protection have significant and positive impacts on enterprises' performance. Good property rights protection can promote enterprises to increase R&D investment, unleash financing constraints, and expand the scope of market activities. However, the current local system under the rule of law is imperfect with certain limitations and biases. We should crack down on malicious evasion of debts and clarify the boundary between criminal and non-criminal economic disputes. We should beware of illegal fund-raising. In addition, we need to resolutely prevent intervening in economic disputes by criminal means. A list of receipt shall be issued and instruments shall be served according to the law when sealing up, seizure and freezing the property involved in the case. A decision shall be made within the legal time limit, and the non-involved property shall be unsealed and unfrozen in time after the case is closed. If the guaranteed property provided by the market entity can meet the execution requirements or the property can be executed separately, the property involved in the case should not be sealed up, seized or frozen beyond the value. If the sealed up or seized property is kept by the law enforcement organ itself, it should not be used or damaged. If any losses exist, the law enforcement organ will be held liable for compensation according to the law. Only by enhancing the sense of personal and property security and their confidence can entrepreneurs move forward with fewer worries and concentrate on entrepreneurship, investment and operation.In order to avoid the adverse impact of enterprise bankruptcy on the market economy order and the normal life of employees, we should use the measure 'from execution to bankruptcy' with prudence. We can apply the composition and reorganization method according to the law to allow the applicant to inject more funds to resume production. Through business integration and asset restructuring, we can turn bankrupt enterprises into a safe state, promote the regeneration of enterprises in danger, and gradually restore their solvency. Judicial organs should improve the efficiency of bankruptcy and liquidation, and improve the rescue and withdrawal mechanism of the socialist market. We will promote the establishment of a special fund for bankruptcy expenses to provide financial support for cases where there is no property for bankruptcy. The administrator shall, in accordance with the law, exercise the right of bankruptcy cancellation and recovery and search for and recover the debtor's property to protect the interests of creditors.3. Improving the Diversified Dispute Resolution Mechanism and the Trial Ability of the Court. — Guided by the facilitation of commercial disputes resolution, we should strengthen the cooperation between litigation, mediation, arbitration and notarization in terms of procedural arrangement, effectiveness confirmation, legal guidance, etc. While improving a fair judicial trial system, we should guide commercial subjects to use alternative dispute resolutions such as mediation and arbitration as well. Under the realization of the market value of intellectual property, we should improve the trial of intellectual property and shorten the trial cycle of related cases. We can apply the legal compensation system in accordance with the law and encourage private enterprises to innovate and start businesses. In order to shrink the trial cycle, we should respect the rules of market economy and explore the efficient operation mechanism of judicial power. We can supervise the administrative organ to see whether they fulfill the administrative commitment according to the law. For losses of the entrepreneur because of unilateral change or cancellation of the agreement due to the public interest or other legal reasons, fair and reasonable compensation is needed. When dealing with cases involving private enterprises, the principle of equal protection in accordance with the law shall be adhered to. Besides, we should improve the case handling quality and guarantee the legitimate rights and interests of the prevailing enterprises. We should also strengthen the construction of public legal service centers to provide legal advisory services to diversify and specialize public legal services. We will improve the civil, administrative and criminal judicial management system and power operation mechanism related to the private economy. And we should standardize judicial acts, strengthen supervision over judicial activities, and serve each market subject with fairness and justice in every case.
